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Financial Careers Come at a Cost to Families

The big influx of highly educated workers into finance in the last two decades has been the subject of some national hand-wringing lately. President Obama, college presidents and economists have all worried aloud that Wall Street has hoarded human resources that might otherwise have gone to science, education, medicine or other fields.

Now, new research is suggesting that the shift also brought another cost — a cost that fell mainly on the people, especially women, who took jobs in finance. Among elite white-collar fields, finance appears to be uniquely difficult for anyone trying to combine work and family.

Finance, on this score, is worse than law and worse than academia. It is far worse than medicine, which emerges from the research as the highly paid profession with the most flexibility. Near finance at the bottom of the list is consulting, another field that became more popular in the last two decades.

The research, by Claudia Goldin and Lawrence Katz of Harvard, answers a question that college students, for all their careful career planning, rarely consider: which jobs offer the best chance at balancing work and family life? A decade or two after college, however, that question often comes to dominate conversations among friends and between spouses.

On almost every aspect of work-life balance, finance and consulting look pretty bad. People who take time off in those fields suffer large penalties, both in terms of money and career opportunities, once they return to full-time work. And part-time jobs are hard to come by, which often forces people to make a choice between working a 70-hour week and leaving a job entirely.

One set of statistics neatly summarizes the findings. After surveying Harvard College alumni 15 years after graduation, Ms. Goldin and Mr. Katz estimated the average financial penalty for someone who had taken a year and a half off and then returned to work. In medicine, that person earned 16 percent less than a similar doctor who had not taken time off. Among people with no graduate degree, the gap was 25 percent. For both lawyers and Ph.D.’s, it was about 29 percent.

For M.B.A.’s, a group dominated by finance workers and consultants, it was 41 percent. Given how much money many make, they can probably do just fine even after such a pay cut. Yet the size of it suggests that time off puts them on a completely different career track.

“The good news is that there are at least some professions where women have been able to carve out a set of policies that are compatible with family life,” Jane Waldfogel, a Columbia professor who studies families, told me. “The challenge for the next generation — and it isn’t just about women — is to extend this to other occupations.”

Ms. Goldin and Mr. Katz, who are two of the country’s leading labor economists and have published the crux of these findings in the American Economic Review, studied Harvard graduates from the last 40 years. That allowed them to compare a fairly similar group of students over a long period, but had the disadvantage of creating a decidedly atypical survey group.

So the two economists compared their results to two other surveys — the National Survey of College Graduates, run by the National Science Foundation, and a study of University of Chicago business school graduates — and found broadly consistent patterns.

According to the most recent National Survey, for instance, 21 percent of doctors in their late 30s and early 40s work less than 35 hours a week. The share was roughly 14 percent for M.B.A. graduates, as it was for lawyers and people with Ph.D.’s.

Photo

Claudia Goldin studied Harvard College alumni, and the results were similar to those of the National Survey of College Graduates and a study of University of Chicago business graduates.Credit
Stephanie Mitchell/Harvard University News Office

The idea that medicine offers more choices than other elite professions may come as a surprise, given that medical training requires notoriously long hours of study. But once doctors reach their 30s, many of them seem to be rewarded with a wider set of options than their counterparts in other fields.

When I heard about the new findings, I immediately thought of two friends of mine, a pediatrician and ophthalmologist married to each other and living in Colorado. Their years of training were typically grueling. While they were in medical school and residency in Northern California in the 1990s, they were surrounded by people at dot-coms who were working shorter hours and making vastly more money.

But today, they have the best work-life balance of any parents I know. She works two and a half days a week and is on call eight weekends a year. He arrives at his office early every morning and takes short lunches so that he can work four days a week. He is also on call 10 weeks a year. They have jobs they love, and they spend a lot of time with each other and their children.

As Al Franken, the comedian turned politician, has observed, “Kids don’t want quality time. They want quantity time — big, stinking, lazy, nonproductive quantity time.” And research on emotional and intellectual development suggests that kids are right to want what they do.

Obviously, certain medical specialties still don’t allow for much flexibility. But a significant number do. (The same seems to be true of public policy and a few other fields; among people with a master’s degree in something other than business, the average pay penalty for taking time off was 13 percent, slightly below what it was for doctors.)

A telling example of a flexible field, Ms. Goldin points out, is obstetrics. It seems to be the archetypal field that must operate on someone else’s clock — a baby’s. Yet as the ranks of female obstetricians have grown, they have figured out how to change that.

Group practices are now the norm, and the doctors take turns being on call. A family’s primary obstetrician isn’t guaranteed to be the one who delivers the baby. In many practices, every doctor will see a woman at least once during her pregnancy, so she knows everyone who may deliver her baby.

Wall Street, consulting firms and law firms have resisted this group approach to work. The partners claim the work is too complicated to be handed from one employee to another. In some cases, that’s no doubt true. Often, though, I bet it isn’t. “Why are women’s bodies less complicated than someone’s account?” Ms. Goldin wryly asks.

The general resistance to group work — and to flexibility — instead seems to stem from old habits, much as obstetricians once would have scoffed at the notion of a group practice. The downsides of allowing people to share work would probably be outweighed by the benefits of being able to hire talented people who want satisfying careers and aren’t willing to work 70-hour weeks.

For now, that group remains largely female. But there is some reason to hope that fathers will be increasingly drawn to such jobs as well. Over the last four decades, according to the economists Mark Aguiar and Erik Hurst, men have increased the average amount of time they spend taking care of children. (Harvard men, however, have not, the Goldin-Katz data show.)

The question of how to balance work and family is almost inevitably a thorny one. Easy answers, free of compromise and sacrifice, are rare, especially for people who don’t earn nearly as much money as doctors.

But if you’re a teenager or college student trying to decide what to do with your life, you at least may want to start thinking about the question. I promise: Most of you will spend a lot of time thinking about it later.